For years, President Trump low oil prices has announced a win for American consumers, and used his position to try to keep it that way. “For consumers, down gasoline prices,” he tweeted on March 9. But when the new coronavirus has much of the world economy has led to a dead end, but it has also helped trigger a collapse in oil prices that Trump forced to reverse course, and try to raise prices. In recent days, he has threatened to impose tariffs on imports of oil, the leaders of Saudi Arabia and Russia called to convince them to cut production, and pushed his government to find ways to buy oil itself. The question now is the extent to which Trump is willing to fight, go. Last Friday, led at the beginning of oil and gas in the United States leaders to the White House for a closed-door meeting with members of senior administration level and a handful of Republican senators. “We will increase our energy to take care of business,” he said at the White House on Saturday. But the surgery is risky. It might help some in the national oil industry hurt others, and labor cost among the losers. Fighting abroad old alliances and disclosure of which might break up unrest in the Middle East. And every action by the White House could consequences for the fight against climate change. The current crisis in the sector is the result of two things: the reduction in demand due to the decline of the crown-related economic activity and a higher intake of a price war between Russia and Saudi Arabia. Demand reduction is easy to understand: the factories are idle, airlines fly less and people stay at home. More supply glut has complicated talks between OPEC members +, a cartel of countries that control much of the oil production in the world apart March 6 fell like Russia and Saudi Arabia have failed to agree on a pact to reduce production. Instead, the two countries, the second and third largest producers of oil world, announced that it would increase production to further reduce the price. With the demand and supply shocks that have hit the oil market at once it is rare and inspiring. “For the first time in decades, we see both,” said Fatih Birol, head of the International Energy Agency in an online event Atlantic Council on March 26, “This, I am sure, significant consequences to come for next years.” in America, the immediate problems are the survival of the energy company and the job security of almost half a million people who use them. There is now an unbridgeable gap between the cost of drilling for oil in the country and the price paid for the oil to market. Producers in Texas, which has experienced a fracking boom in recent years, of the $50 per barrel oil transportation traded to break even on a new well, according to a survey by the Dallas Fed. Oil prices in Texas dipped just below $20 a barrel in recent weeks. The run out of places to store oil companies that produce oil, which means an even bigger drop when leaving the room. “Every little nook and cranny is filled with oil,” says Deborah Byers says oil and gas company in the US EY Consulting manager. Trump and his allies on Capitol Hill are fully aware of the problem: the fate of many of the wealthy supporters of the President of the industry is on the line as well, and the use of the workers whose jobs are concentrated in Texas in United red as a strong, North Dakota and Louisiana. In addition, workers directly employed in the sector, many of them rely more on the local economy in the oil and heavy for the support gas regions. “There are jobs that depend on a limb,” Sen. Ted Cruz, a Texas Republican, Trump said before the White House meeting. “Let’s see failures to a level that this country has not seen for decades” without measures, Cruz said. Trump has proposed a number of different approaches to help. First he tried in the United States directly to buy $3 billion of oil for its Strategic Petroleum Reserve, an idea rejected by Congress. It was not until Saturday, floating rates on oil imports. Above all, he is on the phone with both Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman jumped to try to push a compromise. (The two sides agreed initially to discuss possible production cuts on Monday in an emergency OPEC meeting + which was then pushed to April 9). “We will have our energy business back,” said Trump oil executives gathered Friday at the White House, “I am with you 1000%”. Among the players gathered at the Trump last week were top managers from a handful of major players in the US oil industry, including the leaders of oil companies like Exxon Mobil and Chevron, as well as by independent producers like Continental Resources. But for all the concern in the oil and gas sector, I do not agree on how to solve their leaders the problem. Many small producers who have faced the greatest threat and could go bankrupt in the next few months, desperate for any help, even if it means a government intervention, such as tariffs. Great players with more money are less inclined to push these steps, knowing that they can wait. The American Petroleum Institute, the powerful industry lobbying group, wrote a letter to the Trump last week opposing rates. The sharp drop in oil prices also national security and geopolitical concerns. Continued low oil prices in many developing countries, leading to a huge budget deficit, from Ecuador to Oman. That the financial crisis would almost certainly exacerbate these challenges countries face are fighting the pandemic crown. It may seem the fate of developing countries not as a concern for a president, “America First” was declared as the motto of his government, but the oil has shaped the foreign policy of the United States since the presidency of Franklin Roosevelt and Trump is no exception. Especially in recent weeks, the administration has used the oil prices on geopolitical pressure adversaries such as Iran and Venezuela. The more long-term view geopolitical concern, the consequences for the Middle East, where the United States still has thousands of troops. fiscal break-even oil in Iraq, the export price for a state of oil is necessary to balance their budget, is $60 a barrel, according to the International Monetary Fund. “The proceeds will not be enough to pay the salaries of employees, which is very important for social stability in the country,” said Birol, noting that oil revenues fund 90% of the country’s budget. In recent years, Republicans in the management, including Trump, as a step they have spoken clearly on the American involvement in the Middle East for the protective oil. During the meeting with oil executives on Friday, at least an excess of Republican offer of Saudi Arabia suggests oil, and the threat it poses to American jobs, which could change the strategic long-term interest. “We have a great army which is protected by decades Saudi Arabia,” said Sen. Dan Sullivan, a Republican of Alaska to the White House on Friday. We “some laws that could potentially change the situation if you do not cooperate you started.” A question in the approach in the White House game for oil almost certainly not in the Trump mind: climate change. Trump democratic efforts include support opposite to economic stabilization legislation of the oil and gas industry and environmentalists quickly decried Trump White House meeting. Politics aside, wean the world needs to prevent the oil in the coming decades of catastrophic climate change, but Trump stated goal is to continue to grow and entrench the industry. The volatility of oil prices in recent weeks may weaken for oil that the transition to accelerate the investment case. Alternatively, low oil prices could reduce the economic incentives to reduce emissions. In both cases, analysts say, offer what assistance Trump industrial carnage can help avoid in the near future, but the long-term writing is on the wall: for changing industry requirements or disappear.
Why Trump is so worried and prices-because the oil should be around the bottom
